Ethics Final – AICPA 120 Questions With 100 % Correct Answers
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AICPA
Institution
AICPA
Independence would not be impaired when the litigation is not related to the audit and the amount is not material.
claims, or settlements that related to the client, the member is not independent. - ️️True
If a member does not have the necessary competence to perform the professional service,...
Ethics Final – AICPA 120 Questions
Independence would not be impaired when the litigation is not related to the audit and the amount is
not material.
claims, or settlements that related to the client, the member is not independent. - ✔ ✔ True
If a member does not have the necessary competence to perform the professional service, the member
can engage and supervise a competent person to perform the needed professional service. - ✔ ✔
False
Competence means that the member possess the appropriate technical qualifications to perform
professional services that the member can supervise and evaluate the quality of work perform of the
person hired. This member lacks the knowledge to so perform.
If a member's firm has a delinquent client, and the firm made arrangements with a bank to collect notes
issued by a client as payment for outstanding fees and notifies the client, this would be in violation of
the Code of Professional Conduct. - ✔ ✔ False
This would not violate any part of the Code.
If any person receives an unsolicited financial interest that would impair independence, such financial
interest may be disposed of as soon as practicable and independence is maintained. - ✔ ✔ True
If during the period of the professional engagement or at the time of expressing an opinion a partner in
the office in which the lead engagement partner primarily practices has an immediate family member or
a close relative that is employed by the client, the CPA firm may not be independent. - ✔ ✔ True
If present management brings litigation alleging deficiencies in the covered member's audit work,
independence would not be considered impaired - ✔ ✔ False
Independent would not be considered impaired
If the audit engagement is terminated by either member or client prior to completion, a member is
required to return the client's records as well as the member's working papers. - ✔ ✔ False
working papers are not considered to be client's records
If there is a difference of opinion between a member in business and his or her supervisor, the member
should report this difference of opinion to the external auditors. - ✔ ✔ False, The member in
business should determine after appropriate research or consultation, whether the result of the position
taken by the supervisor failed to comply with professional standards then report this to the next level.
, Independence applies to all audit, examination and review engagements. A more narrow independence
requirement applies to agreed-upon procedures engagement - ✔ ✔ True
Independence is essential when a CPA in the practice of public accounting issues a report that provides
assurance on the reliability of a written assertion that is the responsibility of another party. This type of
engagement is referred to broadly as a nonassurance service. - ✔ ✔ False,
This type of engagement is referred to broadly as an attestation service.
Independence is impaired when litigation between client and member is begun by the member alleging
management fraud or deceit. - ✔ ✔ True
Independence is impaired whenever the partner or professional employee is connected with the client
as a promoter, underwriter, voting trustee, director, or officer - ✔ ✔ True
A CPA firm suing a client for withholding information during an audit would impair their independence -
✔ ✔ True
A firm can inform personnel of independence requirements through training, and of prohibited
investments, through maintaining and communicating a list of clients that require maintenance of
independence - ✔ ✔ True
A grandfathered loan is a loan obtained from a nonclient financial institution that was later sold to a
client. - ✔ ✔ True
A member can retain client records until the client pays for services performed. - ✔ ✔ False
This is considered a discreditable act.
A member in business who is a broker-dealer attending a trade convention in Las Vegas would not be
violating the Integrity and Objectivity Rule if he accepted tickets from one of the vendor to attend a Las
Vegas show. - ✔ ✔ False, The entertainment is associated with active conduct of business directly
before, during or after the entertainment.
A member in business would not be in violation of the Integrity and Objectivity Rule if they were
directed by their supervisor to record misleading entries in an entity's financial records but at the time
did not know the entries were misleading. - ✔ ✔ True, A member has to know that the entries were
misleading at the time.
A member in public practice cannot receive a commission or referral fee on investments recommended
to a tax client. - ✔ ✔ False
Tax is not considered a disqualifying service
A member in public practice is prohibited from accepting a contingent fee that is fixed by courts and
other public authorities. - ✔ ✔ False
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